September 9, 1999, E.C.B. No. 61/95/172 (68 L.C.R. 73)

Between:	Jean Wu Claimant
And:	Her Majesty the Queen in Right of the Province of British Columbia as represented by the Minister of Transportation and Highways Respondent
Before:	Sharon I. Walls, Vice Chair
Appearances:	Robert S. Cosburn, Counsel For The Claimant Darlene A. Leavitt, Counsel For The Respondent

REASONS FOR DECISION

1.   INTRODUCTION

The Claimant, Jean Wu, brought this application seeking an order that she is entitled to additional interest pursuant to subsection 46(4) of the Expropriation Act R.S.B.C. 1996, c. 125 ("the Act"). She settled her claim for compensation for a partial expropriation of her property for all claims but for additional interest pursuant to subsection 46(4) and costs to pursue this interest.

2.  BACKGROUND

The facts are set out in an Affidavit of Robert Cosburn, counsel for the claimant. Wu owns a residence in Burnaby, British Columbia. A portion of her property was expropriated by the respondent, Her Majesty the Queen in Right of the Province of British Columbia as represented by the Minister of Transportation and Highways ("MoTH"), on June 2, 1995. An advance payment of $25,404 was made. There was evidence of negotiations between counsel prior to August 24, 1998, the date scheduled for the compensation hearing. The correspondence sets outs out that the respondent offered an additional $9,298, plus interest under subsection 46(1), plus costs. The claimant accepted this offer on condition that:

i	$4,781 be provided for outstanding costs;
ii	$2,093 be paid in interest pursuant to subsection 46(1) on the $9,298;
iii	the claimant be at liberty to apply to the Expropriation Compensation Board for an order that she was entitled to interest pursuant to subsection 46(4) on the $9,298.

The respondent accepted all three of these conditions.

Wu signed a release releasing MoTH from all claims, except for interest pursuant to subsection 46(4) and costs to pursue this claim for interest, in consideration of $16,172 in new money. A Consent Dismissal Order was filed with the Expropriation Compensation Board, endorsed by the Chair and entered. It provided that "This Board orders that the Claimant's claim, except for interest pursuant to subsection 46(4) and costs to pursue such interest pursuant to section 45 of the Expropriation Act, is hereby dismissed."

3.  STATUTORY FRAMEWORK

Sections 46 and 47 of the Act provide:

Interest

46	(1)	The expropriating authority must pay interest on any amount awarded in excess of any amount paid by the expropriating authority under section 20 (1) or (12) or otherwise, to be calculated annually,
		(a)	on the market value portion of compensation, from the date that the owner gave up possession, and
		(b)	on any other amount, from
			(i)	the date the loss or damages were incurred, or
			(ii)	any other date that the board considers reasonable.
	(2)	Interest is payable at an annual rate that is equal to the prime lending rate of the banker to the government.
	(3)	During the first 6 months of a year, interest must be calculated at the interest rate under subsection (2) as at January 1, and during the last 6 months, interest must be calculated at the interest rate under subsection (2) as at July 1.
	(4)	If the amount of the payment under section 20 (1) or (12) or otherwise is less than 90% of the compensation awarded, excluding interest and business loss, the board must order the expropriating authority to pay additional interest, at an annual rate of 5%, on the amount of the difference, calculated from the date that the payment is made to the date of the determination of compensation.

Interest penalties for delay

47	If, in the opinion of the board, an unreasonable delay in proceedings under this Act has been caused by an owner or the expropriating authority, the board may penalize
		(a)	the owner, by depriving the owner, in whole or in part, of the interest to which he or she is entitled, or
		(b)	the expropriating authority, by increasing, by not more than double, the interest it is required to pay.

4.  CLAIMANT'S POSITION

The claimant says that the advance payment of $25,404 under section 20 is less than 90% of the final compensation ultimately agreed, excluding interest and business loss (and costs). Wu made a settlement of all aspects of her compensation claim except for the specific issue of interest pursuant to subsection 46(4) and costs to pursue this interest.

Although subsection 46(4) uses the words "compensation awarded", the claimant submits that this wording must by implication include resolution of the claim by settlement. The word "award" ought to be given a wider meaning than that put forward by the respondent — that an award refers only to a determination by the board following a compensation hearing heard by the board. A settlement should have the same consequences of law as an award by the board. Since the advance payment is less than 90% of the settlement, the claimant says that the prerequisites of subsection 46(4) have been met. The wording of subsection 46(4) is mandatory and therefore the board must award interest.

The word "award" is also found in subsection 46(1) where the authority is required to pay interest on any amount awarded in excess of the advance payment. MoTH has agreed to pay interest under subsection 46(1) on the settlement sum, even though this sum was not awarded by the board following a compensation hearing. It is inconsistent of MoTH to pay interest under subsection 46(1) and to refuse to pay interest under subsection 46(4). Further, if interest under section 46 is only to be paid following a compensation before the board, it would discourage claimants from settling their claims since the total compensation following a hearing would be greater.

The claimant says that the purpose of subsection 46(4) is an incentive for the authority to make proper advance payment. Subsection 46(4), unlike section 47, is not a penalty clause, but rather part of the legislative provisions to provide interest to make a claimant economically whole when the advance payment has been too low. The claimant suggests that the board can take notice of the fact that no claimant is likely to be made economically whole by payment of interest under subsection 46(1) alone. This is because no claimant is likely to be able to borrow the sum of money that is in excess of the advance payment at the rates of interest set out in subsection 46(2).

5.  RESPONDENT'S POSITION

MoTH says that subsection 46(4) should be interpreted to apply only when a determination of compensation has been made by the board, following a compensation hearing. Interest under subsection 46(4) is payable only when "the [advance] payment ... is less than 90% of the compensation awarded (emphasis added) and the settlement sum is not "compensation awarded". MoTH compares the definitions for "award" and "settle".

"Award" is defined:

i	a judgment or instrument which embodies an arbitrator's decision... The Dictionary of Canadian Law, 2nd ed., 1995;
ii	any words containing a decision, especially of an arbitrator or arbiter. The Oxford Companion to Law, 1980;
iii	the decision or determination rendered by the arbitrators or commissioners or other... extrajudicial deciders... Black's Law Dictionary, 6th ed., 1990.

MoTH submits that the essence of these definitions is a determination by a decision maker.

"Settle" is defined:

i	bring a dispute to an end by arrangement of the parties as opposed to by judgment of the court on the merits... The Dictionary of Canadian Law, 2nd ed., 1995;
ii	to resolve [a grievance] in a manner which is accepted by the parties who are responsible for the conduct of the grievance. Words and Phrases, vol.7, 1993
iii	...the conclusive fixing or resolving of a matter; the arrangement of a final disposition of it. A compromise achieved by the adverse parties in a civil suit before final judgment whereby they agree between themselves upon their respective rights and obligations, thus eliminating the necessity of judicial resolution of the controversy...(emphasis not added) Canadian Law Dictionary, 1983

MoTH says that the key aspect is that a "settlement" is an arrangement between parties to a dispute without the need for a judicial resolution.

MoTH points out that while it frequently agrees to pay interest under subsection 46(1) on additional monies paid as part of a settlement, it does not always agree to do so. Interest under subsection 46(1) is intended to make the claimant economically whole by compensating the claimant for temporary loss of the use of capital. It is MoTH's position that the interest under subsection 46(4) is additional interest that gives the claimant more than simple compensation for temporary loss of the use of capital. The 1971 Law Reform Commission of British Columbia Report on Expropriation recommends at p. 176 that "there should be an interest penalty to the extent that an arbitration award exceeds the statutory offer" (emphasis added). MoTH suggests that even though the word penalty is not used in subsection 46(4), the additional interest under this subsection is, in fact, a penalty that applies only when a compensation award by the board exceeds the advance payment by a specified percentage. Settlements by definition are agreements between parties. In the present case a settlement was made in which the parties agreed that MoTH would pay interest under subsection 46(1) but no agreement was made to pay interest under subsection 46(4). An authority should not be penalized after making a settlement in having a requirement to pay additional interest imposed on it.

MoTH says that the decision of this board in Richland Farms Ltd. v. British Columbia (Ministry of Transportation and Highways) (1991), 46 L.C.R. 66 can be distinguished. In that case the board did order that subsection [46(4)] interest was payable on a settlement claim reached between the parties. However, in Richland Farms, a consent order was filed with the board, endorsed by the chair, and entered which provided:

The Expropriation Compensation Board orders that the Respondent pay the Claimant the sum of $700,000 plus costs in accordance with section [45] of the Expropriation Act, and interest pursuant to section [46] of the Expropriation Act. ...

If the parties are unable to agree as to the calculation of costs and interest this matter shall be remitted to the Board for an Order as to interest payable and/or determination of costs.

The parties in Richland Farms subsequently brought an application to the board as to whether interest under subsection [46(4)] was payable. The board ordered that subsection [46(4)] was payable. The parties had asked the board to approve a consent order that contained as one of its terms payment of a set sum plus interest pursuant to section [46]. J.H. Heinrich Q.C., the then chair of the board, stated that this order entered by the board had the same force and effect as an award following a full hearing. The wording of subsection [46(4)] is mandatory when the advance payment is less than 90% of the award.

MoTH submits that in the present case the consent order states that the claim is dismissed, with the exception of the claim for interest under subsection 46(4). It does not specify a sum of money to be paid that could have the same force and effect as an award.

6.  ANALYSIS

The claimant relies on the legislative provision in subsection 46(4) of the Act which makes additional interest mandatory in specified circumstances. I agree that there is evidence to show that the advance payment is 73% of $34,702, the total sum eventually paid to the claimant for her compensation claim, excluding sums specified to be for interest and costs. Thus the advance payment is less than 90% of the total sum eventually paid to the claimant for her claim.

However, the issue is whether subsection 46(4) applies in the present circumstances when the final sum paid for compensation is a result of a settlement. The wording of subsection 46(4) states that additional interest is only payable when the advance payment is less than 90% of the compensation awarded (emphasis added). After reviewing the definitions put forward by MoTH I agree that there is a distinction between the meanings of "award" and "settle". The hallmark of an award is that it is a decision by a decision maker other than a judge. In my opinion it does not include a settlement made between the parties. Thus, the proper construction of subsection 46(4) is that additional interest under this subsection is payable when the advance payment is less than 90% of an award of compensation by a decision maker which in this case is the board. Since all the preconditions set out in subsection 46(4) are not met in this case no additional interest is payable.

It is true that subsection 46(1) also uses the word "award" in providing that ordinary interest is payable on any amount awarded in excess of the advance payment. I agree with MoTH, that interest under subsection 46(1) in this case was paid because MoTH agreed that it be paid, although no compensation had been awarded. It did not agree to pay interest under subsection 46(4). Settlements are agreements made between parties and the parties are free to agree to any terms that they wish. Usually settlements between parties who have legal advice take into account various risks and consequences faced by both of those parties if they proceed to a hearing and the determination of the issues by a decision maker. In the circumstances of a settlement, I think that one ought to be cautious in equating an agreement by the respondent to pay an extra $9,298 to the claimant (plus interest on that sum under subsection 46(1) and costs), with an order by the board that an extra $9,298 be paid to the claimant for the loss in market value of the land as a result of the taking.

In my view, the facts in Richland Farms are distinguishable from the facts in this case. In Richland Farms the consent order specified the payment of a specified sum and the board said that this order had the same effect as an award by the board. The board decided that the conditions of subsection 46(4) were met in Richland Farms and therefore additional interest was mandatory. In this case, although we accept the affidavit evidence of the settlement that had been reached, the consent order itself merely dismisses the claim and does not set out the terms of the settlement. Therefore, unlike Richland Farms, on the face of the consent order there is no "award" for a specified sum to be paid together with interest under section [46]. The requirements set out in subsection 46(4) are not present as they were in Richland Farms.

7.  CONCLUSION

The claimant is not entitled to additional interest under subsection 46(4) of the Act on the settlement paid. Although the claimant has been unsuccessful, there was some merit in her argument and case authority that appeared to support her case. She is entitled to 50% of her reasonable legal costs in bringing this application.